Atop I.M.F., Contradiction and Energy

Dominique Strauss-Kahn, left, head of the I.M.F., with Jean-Claude Trichet, of the European Central Bank, last December.Credit
Jock Fistick/Bloomberg News

Artful politician that he is, Dominique Strauss-Kahn has a keen sense for not just his strengths but also his potential weaknesses — though few would be quite as blunt in saying so.

Considered the Socialist party’s leading candidate for president of France, Mr. Strauss-Kahn identified three threats to his aspirations in an interview with the newspaper Libération, held on April 28 but published only this week. “Money, women and my Jewishness,” he said. “Yes, I like women,” he went on. “So what?”

Mr. Strauss-Kahn added, “For years they’ve been talking about photos of giant orgies, but I’ve never seen anything come out.”

Today, Mr. Strauss-Kahn sits in a jail cell on Rikers Island in New York, his reputation — and any political ambitions — perhaps irreparably tarnished by his arrest on charges of attempted rape of a hotel maid in Manhattan last weekend.

As managing director of the International Monetary Fund in Washington since late 2007, Mr. Strauss-Kahn has returned the agency to relevance by helping engineer a $1 trillion bailout for Europe — but only after an initial humiliation when he was reprimanded for a brief affair in 2008 with a subordinate.

A prominent Socialist, he has held powerful positions in previous French governments despite his wealth, lavish lifestyle and his reputation as a womanizer.

A man with an impressive intellect, great charm and restless energy, his flaws have been accepted because of his accomplishments. “Even the chatter about women was discounted enormously by everyone around him,” said Steven C. Clemons, director of the American Strategy program at the New America Foundation who first met Mr. Strauss-Kahn in 1998 and was impressed by his strong personality.

“I don’t think there was a conspiracy of silence,” Mr. Clemons said. “The discussion I always heard about him was he’s one of the titans, that he’s such an extraordinarily different person, that rules don’t apply to him in the same way.”

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Anne Sinclair, the wife of Dominique Strauss-Kahn, is an American-born French journalist.Credit
Andrew Harrer/Bloomberg News

One former I.M.F. official said that, had Mr. Strauss-Kahn been a less senior person, he might been fired or at least “sent to Siberia” because of the affair with his underling. He survived an investigation, in part, this person said, because the culture at the I.M.F. dictated “no rules” for the managing director and because there was little appetite to rid the agency of a charismatic and effective leader when an international financial crisis looming.

Mr. Strauss-Kahn arrived at the I.M.F. at what would be an opportune time for him and the agency, which had become an international organization with little clout since the Southeast Asia financial crisis in the mid 1990s. A former finance minister for France, he had a deep knowledge of international economics and was on a first-name basis with most of Europe’s top leadership.

He played a pivotal role as Europe’s debt crisis deepened last May, and leaders were deadlocked over what to do. In midnight phone calls, Mr. Strauss-Kahn pressed them to take action. Quickly, he urged, before things got worse. His insistence helped overcome their hesitance, and they agreed to a set up a $1 trillion rescue package to help Greece and other troubled countries, with the I.M.F. contributing to the bailout fund. And as countries like Germany pushed for harder austerity terms, he was vocal in saying that could backfire by slowing economic growth too much — which seems to be the case in Greece today.

“The only real strength of the I.M.F. is the ruthlessness of truth-telling,” Mr. Strauss-Kahn said at the time.

“Early on, the Europeans were in complete denial. I think his main accomplishment will go down as persuading them that they had to deal with Greece before it was too late. And he did that not by bullying them, not by banging the table, but much more by coaxing and persuading them,” said Simon Johnson, who was the I.M.F.’s chief economist from March 2007 to August 2008.

It was a seminal triumph for the I.M.F. and a moment to savor for Mr. Strauss-Kahn, who was already winning plaudits after the inauspicious start resulting from the affair.

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He had a reputation as a skilled, hands-on and tough-minded manager who did not shy from making tough decisions. He cut the I.M.F.’s staff by 400 to reduce costs. But he still managed to command the loyalty of his staff, by engaging them on their own terms, and by delving into the details of their highly technical research, according to several current and former fund employees. Traveling constantly, Mr. Strauss-Kahn is known to carry two BlackBerrys with him — one encrypted and the other not — to stay in constant touch. Those on the receiving end say his messages often come adorned with two smiley faces.

“For a guy who was so flamboyant, he found a way to get things done, to save the institution by working behind the scenes,” said one official, who spoke on condition of anonymity. “He is effective at maneuvering in very, very high circles — which is really not at all an easy thing to do.”

Mr. Strauss-Kahn and his third wife, the American-born French journalist Anne Sinclair, have kept a surprisingly low profile in Washington, despite their prominence in France.

Ms. Sinclair, who inherited a fortune from her grandfather, an art merchant who had exclusive contracts with Matisse and Picasso, was a famous television interviewer in France, a kind of Barbara Walters, before moving to Washington with Mr. Strauss-Kahn.

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The French writer Tristane Banon said Mr. Strauss-Kahn tried to rape her in 2002.Credit
Charles Platiau/Reuters

They live in a 5-bedroom, 5-bath brick home in fashionable Georgetown; the house, bought in 2007 for $4 million, is in her name, real estate records show. They own two apartments in France, one that cost 4 million euros ($5.7 million) that was bought with cash, and a penthouse bought by Ms. Sinclair in 1990 for 2.5 million euros ($3.5 million), the year before they married. They also own a century riad, or private house, in Marrakesh, Morocco, bought for 500,000 euros ($706,000) in 2000.

The couple’s wealth enabled them to live well beyond his I.M.F. salary of about $442,000 — tax-free, as are salaries for many employees at international agencies — and an expense allowance of $79,120, according to the 2010 I.M.F. annual report. His marriage to Ms. Sinclair and their lifestyle have led to Mr. Strauss-Kahn being called a caviar socialist, a term used in France, an image that was reinforced recently with the publication of a photo of him stepping into a Porsche in Paris.

For all their connections, the couple does not often turn up at A-list parties in Washington or mingle with the city’s political elite. “I’ve never met them, I don’t know anything about them and I can’t find anybody who has met them,” said Sally Quinn, the Georgetown doyenne and wife of the former Washington Post executive editor Ben Bradlee. “It’s weird; we’ve always known the head of the I.M.F. before.”

Mr. Strauss-Kahn has managed to rise to the corridors of power in France even though he did not graduate from the elite Ecole Nationale d’Administration — he failed the entrance examination — though he later taught there after graduating from another French university. He met his first wife in high school in Monaco and married her when he was 18. They had three children before divorcing. In 1986, he married his second wife, who had given birth to their only child a year earlier. He and Ms. Sinclair have no children together.

Ms. Sinclair has supported Mr. Strauss-Kahn through all his reported indiscretions since their marriage in 1991. Tristane Banon, a journalist and writer, publicly claimed in 2007 that Mr. Strauss-Kahn tried to rape her during an interview in 2002, when she was 22. Aurélie Filipetti, a respected Socialist parliamentarian in France, said in 2008 that she had been groped by Mr. Strauss-Kahn and would “forever make sure” she was never “alone in a room with him.”

In their 2006 book “Sexus Politicus” on the sexual behavior of politicians, the French journalists Christophe Deloire and Christophe Dubois devoted an entire chapter to Mr. Strauss-Kahn under the heading, “The DSK Affair.” They cite the case of a young journalist who tells the authors she had met Mr. Strauss-Kahn when she was researching a book on the professional failure of leaders. “He was so forward in his manner and inappropriate that she was on the point of lodging a complaint,” they wrote. They added that “his art of seduction which can reach obsessiveness has no equal besides his intellect.”

After Mr. Strauss-Kahn’s brief affair with a Hungarian economist at the I.M.F. in early 2008 came to light, he was allowed to stay after an investigation found that he had not abused the power of his office. Still, he was chastised for inappropriate behavior and apologized.

The I.M.F. maintains a more permissive stance toward sexual relationships between supervisors and subordinates than other multinational organizations. Its ethics policy states that such relationships “do not, in themselves, constitute harassment.” The World Bank, by contrast, says such a relationship is “a de facto conflict of interest.”

When — even if — Mr. Strauss-Kahn will ever return to his expansive high-ceilinged office on the 12th floor of the I.M.F. building in Washington is not clear. The office has a reception area, a comfortable couch in a sitting area, a conference room and a bathroom. “It exuded power,” said one former IMF official.

All of which is a far remove from his cell in Rikers Island, where Mr. Strauss-Kahn has been ordered to stay pending trial. His lawyers are fighting for his release on the $1 million bail posted by his wife, arguing that he suffers from sleep apnea and that he should not be considered a flight risk.